Question

Details of Notes Receivable and Related Entries

Gen-X Ads Co. produces advertising videos. During the current fiscal year, Gen-X Ads Co. received the following notes:

	Date	Face Amount		Interest Rate		Term
1.	Apr. 10	$78,000		4	%	60	days
2.	June 24	12,000		6		30	days
3.	July 1	27,000		6		120	days
4.	Oct. 31	27,000		5		60	days
5.	Nov. 15	72,000		6		60	days
6.	Dec. 27	108,000		4		30	days

Required:

Assume 360 days in a year.

1. Determine for each note (a) the due date and (b) the amount of interest due at maturity, identifying each note by number.

Due Date	Interest Due at Maturity
(1)	$
(2)
(3)
(4)
(5)
(6)

2. Journalize the entry to record the dishonor of Note (3) on its due date. If an amount box does not require an entry, leave it blank or enter "0".

3. Journalize the adjusting entry to record the accrued interest on Notes (5) and (6) on December 31.

Dec. 31

4. Journalize the entries to record the receipt of the amounts due on Notes (5) and (6) in January. If an amount box does not require an entry, leave it blank or enter "0".

Jan. 14
Jan. 26

Answer 1

			Gen-X Ads Co.
	Note	1	2	3	4	5	6
	Date of issuing note	10-Apr	24-Jun	1-Jul	31-Oct	15-Nov	27-Dec
	Period	60 days	30 days	120 days	60 days	60 days	30 days
	Calculation of Maturity Date
	Note 1			Maturity Date
	April	20	days
	May	31	Days
	June	9	days	9-Jun
	Total	60	days
	Note 2
	June	6	days
	July	24	Days	24-Jul
	Total	30	days
	Note 3
	July	30	days
	Aug	31	days
	Sep	30	days
	Oct	29	days	29-Oct
	Total	120
	Note 4
	Nov	30	Days
	Dec	30	days	30-Dec
	Total	60	days
	Note 5
	Nov	15	days
	Dec	31	Days
	Jan	14	days	14-Jan
	Total	60	days
	Note 6
	Dec	4	days
	Jan	26	Days	26-Jan
	Total	30	days
1)		Principal	Rate	Time	Interest amount	Interest due on Maturity
	Note 1	$    78,000.00	4%	60 days	(78000*4%*(60/360)	520
	Note2	$    12,000.00	6%	30 day	(12000*6%*(30/360)	60
	Note 3	$    27,000.00	6%	120 days	(27000*6%*(120/360)	540
	Note 4	$    27,000.00	5%	60 days	(27000*5%*(60/360)	225
	Note 5	$    72,000.00	6%	60 days	($72000*6%*60/360)	720
	Note 6	$ 108,000.00	4%	30 days	($108000*4%*30/360)	360
2)	Journalize the Dishonour of Note 3 on its due date
Date	Particular	Amt(Dr)	Amt (Cr)
28-Oct	Accounts Receivble	$    27,540.00
	To Interest Revenue		$    27,000.00
	To Note Receivable		$          540.00
	(Being amount of Note 3 Matured on due date)
3)	Journilse the adjusted entry to record the accrued interest on note 5 and 6
	Note 5
Date	Particular	Amt(Dr)	Amt (Cr)
31-Dec	Interest Receivble=($72000*(46/360)*6%)	$          552.00
	To Interest Revenue		$          552.00
	(Being amount of Intt due on Note 5)
	Note 6
Date	Particular	Amt(Dr)	Amt (Cr)
31-Dec	Interest Receivble=($108000*(4/360)*4%)	$            48.00
	To Interest Revenue		$             48.00
	(Being amount of Intt due on note 6)
4)
Date	Particular	Amt(Dr)	Amt (Cr)
14-Jan	Cash	$    72,720.00
	To Interest Receivable		$          552.00
	To Interest Revenue		$          168.00
	To Accounts Receivable		$    72,000.00
	(Being amount received on maturity
26-Jan	Cash	$ 108,360.00
	To Interest Receivable		$             48.00
	To Interest Revenue		$          312.00
	To Accounts Receivable		$ 108,000.00
	(Being amount received on maturity